By Lana Gladstein
What are the odds of getting a stay of co-pending litigation after filing an inter partes review (“IPR”) involving all or some of the same patents? The answer is not a simple one. While there has been some data suggesting that, purely statistically, the odds are in favor of getting a stay (e.g., http://www.aiablog.com/post-grant-proceedings/will-an-ipr-result-in-a-stay-of-co-pending-litigation/), ultimately the grant of a stay is highly fact-dependent and discretionary with the court handling the litigation. A recent decision out of the District of Delaware, Davol, Inc., v. Atrium Medical Corporation, Civ. Action No. 12-958-GMS (D.Del., June 17, 2013), provides valuable guidance in gauging whether a litigation stay in view of an IPR is likely.
Davold sued Atrium for the alleged infringement of three patents related, generally, to hernia patches and methods of treating hernias. Within a month of the commencement of suit, defendant filed for inter partes review on two of the three patents-in-suit and sought to stay the litigation within a week of its petition for review. At the time the court was deciding the motion to stay, the PTO’s Patent Trial and Appeal Board (PTAB) had not ruled on the IPR petition.
After engaging in a detailed analysis, the court denied defendant’s motion for stay. The court considered three factors: (a) whether a stay would unduly prejudice the non-moving party; (b) whether a stay will simplify the issues in the case; and (c) the status of the case in terms of the extent of discovery taken and the proximity of the trial date.
On the first factor, the court found that a stay would unduly prejudice the plaintiff patentee. This prejudice factor appears to have carried the most weight in this court’s analysis. In determining whether the non-moving party would be prejudiced, the court considered four sub-factors: (1) the timing of the review request; (2) the timing of the request for stay; (3) the status of the review proceedings; and (4) the relationship of the parties. While the court found that the first and second sub-factors would not prejudice the patentee, the third and fourth sub-factors, however, would result in prejudice.
Specifically, with respect to the first two sub-factors, the court found that defendant did not seek an unfair tactical advantage since both the IPR and the motion to stay were requested shortly after the commencement of suit. With respect to the third sub-factor, the court found that the infant stage of the IPR proceeding is prejudicial to the plaintiff because it would potentially result in a two-year delay in the adjudication of the alleged infringement claims and, therefore, would unnecessarily impair Davol’s patent rights. On the fourth sub-factor, the court found that because the parties are direct competitors in a limited market, a stay would exacerbate the “prospect of lost market share and price erosion.” Thus, the court found that because the PTO had not yet instituted the review and because the parties are direct competitors, a stay would unduly prejudice the non-moving party patentee.
On the second factor of whether a stay will simplify the issues in the case, the court found against the stay predominantly because the review concerned only two out of the three patents in suit. The court noted that “a stay of this action in its entirety will do little to advance the parties’ dispute over the ‘420 Patent [not subject to the IPR].” With respect to the two patents subject to the review, the court reasoned that numerous issues would not be resolved by the PTO, including validity under 112, equitable defenses, infringement, and damages. Thus, the court concluded that these issues might still need to litigated even if the PTO did grant review of the two patents in suit.
Finally, while the court found that the last factor, the early stage of the litigation, weighed in favor of a stay, the court ultimately concluded that the three stay factors taken together weighed against a stay.
The Davol decision suggests that the competitive relationship between the parties and an IPR on fewer than all of the patents-in-suit may very well be the determinative factors weighing against a stay of litigation.
By Lana A. Gladstein